Bloomberg now expects 2023 to be one of the worst years for the world economy since 1993. But don’t panic — here are 3 stocks to help protect you from the pain
Bloomberg now expects 2023 to be one of the worst years for the world economy since 1993. But don’t panic — here are 3 stocks to help protect you from the pain
The world economy has largely bounced back from the COVID-19 pandemic, but dark times could lie ahead according to Bloomberg.
Economist Scott Johnson at Bloomberg Economics forecasts that the world economy will grow 2.4% in 2023, marking a slowdown from the 3.2% growth expected for this year. 2.4% would be the slowest growth since 1993 — except for the crisis years of 2009 and 2020.
His analysis also shows the U.S. economy entering a recession at the end of 2023. For the euro area, a recession is expected at the start of the year.
“In the US, with wage gains set to keep inflation above target, we think the Fed is headed toward a terminal rate of 5%, and will stay there till 1Q24,” Johnson writes. “In the euro area, meanwhile, a more rapid decline in inflation will mean a lower terminal rate and the possibility of cuts at the end of 2023.”
The prospect of a recession does not bode well for stocks. U.S. GDP demonstrated growth in Q3 and the S&P 500 is still down 19% year-to-date.
Of course, some businesses are more resilient than others. Here’s a look at three companies capable of making money through thick and thin. Wall Street also sees significant upside in this trio.
Don’t miss
Southern Co
Southern (NYSE:SO) is a gas and electric utility holding company headquartered in Atlanta. It serves about nine million customers.
The utility sector is known for being a defensive play. No matter how many times the Fed raises interest rates — and how bad next year turns out to be — people still need to heat their homes in the winter and turn the lights on at night.
The recession-proof nature of the business also means Southern can pay reliable dividends.
In April, the company boosted its quarterly payout by 2 cents per share to 68 cents per share, marking the 21st consecutive year that Southern has increased its dividend.
Look further back, and you’ll see that the company has paid steady or increasing dividends since 1948.
In the first nine months of 2022, Southern earned an adjusted profit of $3.35 per share, up 9.8% from the same period last year.
Last Wednesday, Wells Fargo analyst Neil Kalton raised his price target on Southern from $70 to $77. While he kept an Equal Weight rating on the shares, the new price target implies a potential upside of 11%.
Kroger
The economy moves in cycles, but people always need to shop for food. As a result, Kroger (NYSE:KR) can make money through our economy’s ups and downs.
That’s one of the reasons why in an era where physical stores are under serious threat from online merchants, Kroger remains a brick-and-mortar beast.
The company has expanded its online presence, too. Kroger’s digital sales in 2021 clocked in 113% higher compared to two years ago.
You can see Kroger’s resilience in its dividend history: the company has increased its payout to shareholders for 16 consecutive years.
Evercore ISI analyst Michael Montani recently upgraded Kroger from ‘in line’ to ‘outperform’ with a price target of $56 — implying a potential upside of 26% from where the stock sits today.
Coca-Cola
Let’s round out the list with Coca-Cola (NYSE:KO) — a classic example of a recession-resistant business. Whether the economy is booming or struggling, a can of Coke is affordable for most people.
The company’s entrenched market position, massive scale, and portfolio of iconic brands — including names like Sprite, Fresca, Dasani and Smartwater — give it plenty of pricing power.
Add solid geographic diversification — its products are sold in more than 200 countries and territories around the globe — and it’s clear that Coca-Cola can thrive under all circumstances. After all, the company went public more than 100 years ago.
More impressively, Coca-Cola has increased its dividend for 60 consecutive years. The stock currently yields 2.8%.
UBS analyst Peter Grom has a ‘buy’ rating on Coca-Cola and a price target of $68 — roughly 9% above where the stock sits today.
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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
